Mesa is offering more than $2.8 million in incentives to lure a beer distributor - and its 455 employees - to the city in what is the largest single influx of jobs to the community in years.
Crescent Crown Distributing plans to break ground this month in west Mesa, moving from its current Phoenix locale. The site is in the middle of an area decimated in the last 10 years by an exodus of car dealers, a Motorola manufacturing plant, and stores of all sizes.
The location on Broadway Road near Longmore is one of west Mesa's last pieces of farmland, having been zoned for agriculture when an irrigation ditch was put on the property in 1918.
The Crescent Crown plant and corporate headquarters is one of the few large investments along Broadway in years, estimated at $25 million.
"This is huge," said Patrick Murphy, an economic development specialist for the city. "This, in our opinion, could be a catalyst for new development in west Mesa."
Crescent Crown distributes Miller, Coors, Heineken USA, Welch's, Sunny D and dozens of other beverages in central Arizona, claiming it's one of the nation's five largest distributors. The move is a homecoming of sorts, as one of the company's acquisitions in recent years was the Pearce Beverage Co., which was founded in Mesa in 1911.
Its new jobs outstrip any single new employer since at least 2008, Murphy said, as the largest number of jobs by single employers ranged from 50 to 80 jobs in that time.
The company chose the site because it's at the center of its distribution area, Murphy said. Economic incentives helped as well, he said.
A property tax break called a GPLET is the biggest incentive. That practice has come under fire in recent years and resulted in the Legislature reducing how generous cities can be while luring businesses. Mesa will offer $1.5 million over 20 years in its GPLET, or Government Property Lease Excise Tax. That incentive transfers the property title to the city, which can slash the tax rate.
In this case, Crescent Crown avoids $1.5 million over 20 years in today's dollars, or about $2.5 million over the entire span. After 20 years, Crescent Crown gets the title and pays the normal tax rate on a 23-acre site with a building of 305,000 square feet.
The city is also offering $1.6 million in tax credits because the property is in an economic development area called an enterprise zone. Another $200,000 worth of incentives are offered, half for job training and half in the form of waived development fees.
Mesa argues the incentives will bring in $6.8 million, in the form of building permits, construction taxes, a property tax and sales taxes generated by employees. The company will pay $22 million a year in payroll.
A Crescent Crown representative did not return a call for comment.
GPLET incentives unfairly offer breaks to some businesses while transferring the tax burden to the rest of the community, said Jennifer Schuldt, vice president of the Arizona Tax Research Association.
She found this deal especially problematic, as it resulted in a business moving within the state instead of adding overall jobs.
"It was never intended to have cities steal businesses from other cities to be in their cities instead, and I think that's one of the abuses of GPLET," Schuldt said.
The organization led a three-year battle to cut GPLET benefits, resulting in lawmakers limiting the deals in 2010. Arizona's GPLET law now reins in the perks, she said, but she still advocates abolishing the benefits. The Phoenix-based Goldwater Institute has sued numerous cities to block various incentives and has criticized GPLET, including through a study that showed Arizona governments lose $30 million a year in tax revenue through GPLET deals. However, Goldwater hasn't sued any cities over GPLET yet. A Goldwater representative said the organization had just become aware of the Crescent Crown incentive and would review it.
Mesa has also offered GPLET incentives for the proposed Gaylord resort in east Mesa.
Mesa Councilman Dennis Kavanaugh said this incentive is exactly what the GPLET law was designed for, as it will greatly boost the value - and tax revenue - on a piece of underused land. Crescent Crown will generate millions in taxes and other benefits even with the incentive, said Kavanaugh, who represents the Mesa district where the distributor will locate.
"It's probably one of the largest relocates in the city in decades and it's a company that has a great track record of involvement in cities where they are located," Kavanaugh said.